Blacklisting the blacklisters - Leigh Day

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Blacklisting the blacklisters: how to use ethical procurement to achieve justice for blacklisted workers. Own up, Clean up, Pay up.

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Introduction This brief guide provides information on what blacklisting is and what action public authorities can legally take against companies who engaged in blacklisting. Contracting authorities can exclude blacklisters Blacklisting can amount to an act of grave misconduct and so can justify exclusion of economic operator. This brochure sets out why any company which engages or has engaged in the blacklisting of employees should be considered to have committed an act of grave misconduct in the course of its business, and how they should be excluded from bidding for a public contract unless it can demonstrate that it has taken appropriate remedial steps. This brochure will focus on blacklisting in the construction sector, and procurement by public authorities. Both Tower Hamlets LBC and the Welsh Government have recently taken action in relation to procurement and excluding blacklisting companies, and in excess of 30 councils are seeking to deny contracts to known blacklisters. Publication Date: September 2013. Authors: Chris Benson and Michael Newman

What is Blacklisting? Blacklisting has been defined as ‘the systematic compilation of information on individual trade unionists and their use by employers and recruiters to discriminate against those individuals because of their trade union membership or because of their involvement in trade union activity’. Blacklists are referred to in legislation as ‘prohibited lists’ when concerned with trade union activity. However, a blacklist could also detail individuals who have raised health and safety complaints, or environmental matters. Blacklisting has devastating effects, including lengthy periods of unemployment, and being forced to retrain to work in other industries. Not only does this cause financial hardship for the person blacklisted, but also for anyone who is dependent on that person’s career. The blacklisting of individuals has been unlawful since early 2010, and legislation has been put in place to prohibit its use. It is important therefore that public sector organisations are aware of the relevant legislation and how to apply it.

Blacklisting and The Consulting Association In 2009, the Information Commissioner’s Office (“ICO”) carried out an investigation into a private business called The Consulting Association (“TCA”), including raiding their offices. The ICO found that TCA had been providing a service to over 40 construction companies. It seized a blacklist and files containing extensive information on more than 3,200 individuals across the UK, which was used to vet individuals and deny people employment (including for being a member of a trade union or for having raised health and safety concerns). The individual who ran TCA was subsequently prosecuted and fined for failing to comply with the Data Protection Act 1998 and register as a data controller. 1. BIS Guidance on Blacklisting, March 2010, 2. The Employment Relations Act 1999 (Blacklists) Regulations 2010 (“the Blacklist Regulations”)

The Law UK Legislative Framework relevant to blacklisting The issue of blacklisting cuts across several areas of legislation. Following the ICO’s investigation into TCA, the Blacklist regulations were brought into effect, and provide another obligation for employers about the information they keep for recruitment and vetting practices.

The Data Protection Act 1998 The Data Protection Act controls how personal information is used by organisations, businesses or the government. The ICO has powers to bring about compliance with the Data Protection Act 1998 and related laws. These include criminal prosecution, non-criminal enforcement and audit. Anyone who processes personal information must notify and register with the ICO as a data controller and comply with the eight principles of the Data Protection Act. The ICO will update the register of data controllers, which is available to the public for inspection. If an individual has been operating a blacklist, it will have no legitimate reason for processing an individual’s information in this way. By operating such a list, individuals can be prosecuted for failure to comply with the Act and failure to register as a data controller, as was the case with an individual in the TCA.

Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) The Act, amongst other things, defines trade unions and states that they are the subjects of legal rights and duties. It protects the rights of workers to organise into, or leave, a union without suffering discrimination or detriment. Section 137 of this Act made it unlawful for employment to be denied on trade union grounds or non-trade union grounds. The blacklisting of workers therefore gives rise to potential claims under Section 137 of the Act.

The Law The Employment Relations Act 1999 (Blacklists) Regulations 2010 The Blacklist Regulations: •

define a prohibited list (a blacklist) and prohibit the compilation, dissemination and use of prohibited lists;

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make it unlawful for organisations to refuse employment, to dismiss an employee or otherwise cause detriment to a worker for a reason related to a prohibited list ;

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make it unlawful for an employment agency to refuse a service to a worker for a reason related to a prohibited list ;

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provide for the employment tribunal to hear complaints about alleged breaches of the regulations; and

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as an alternative, provide for the courts to hear complaints from any persons that they have suffered loss or potential loss because of a breach of the regulations

Dave Smith, Blacklist Support Group

The Current Situation The Scottish Affairs Select Committee is investigating blacklisting, and has published an interim report condemning the practice. The Committee will make recommendations to the UK Government in due course on a number of issues, including whether companies that have been involved in blacklisting be prevented from tendering for public sector contracts in the future and whether existing legislation is sufficient. The Welsh Government has also condemning the use of blacklists, and has produced a policy note about procurement and companies involved in blacklisting and TCA.

Addressing Blacklisting through Procurement Below is an overview of the key legal issues relating to addressing blacklisting through procurement. This information is intended as a guide only and is not a substitute for appropriate legal advice, although we have included a model motion to be used by councillors at appendix A. The recommended steps include: •

Excluding blacklisters from tendering

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Requesting information from tendering companies about blacklisting

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Altering standard terms and conditions to include provision for termination if blacklisting used by the company

Contracting authorities can exclude blacklisters Blacklisting can amount to an act of grave misconduct and so can justify exclusion of an economic operator. Councillors may be faced with opinions that to exclude blacklisters would be to expose the local authority to the risk of litigation. While such risk can never be wholly avoided, it must also be remembered that local authorities face similar risks if contracts are awarded to blacklisters. A decision to award a contract to a blacklister would be subject to judicial review on principles of equal treatment and proportionality. The following safeguards must be considered in excluding blacklisters:•

Proportionality – exclusion must be considered on a case-by-case basis, and cannot state that all blacklisting companies be banned from tendering for work forever. For example, it may be that companies are only excluded while they refuse to compensate and apologise to blacklisted workers;

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Evidence – it must be established the company has engaged in wrongdoing (an admission, a court or tribunal decision, or featuring in a report from a Parliamentary Select Committee). Grave misconduct also includes “conduct with wrongful intent”, which would cover blacklisting taking place before 2010, when the Blacklisting Regulations came into force.

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Exclusion is not a means of punishing operators for past wrong doing, but rather a means of putting right past wrongdoing and ensuring that it does not re-occur (self-cleaning, see below).

Proportionality and self-cleaning The concept of self-cleaning originates from competition law and encompasses circumstances in which an economic operator (the company) has taken measures to put right its earlier wrongdoing and to prevent it from re-occurring. Where the company has self-cleaned, exclusion would generally be disproportionate. Self-cleaning entails a four stage process:1. Clarification of the relevant facts and circumstances: What are the facts and circumstances of the wrongdoing? When did the wrongdoing take place? Has there been any subsequent wrongdoing? 2. Effective repair of the damage caused: What has the company done to repair the damage caused by its wrongdoing? This could take the form of compensation to the victims of blacklisting or offering employment. 3. Personnel measures: Have any staffing/personnel measures been put in place to avoid reoccurrence? 4. Structural and organisational measures: What structural and organisational measures have been put in place to avoid a re-occurrence? If, on the basis of this 4 stage assessment, the company demonstrates that they have effectively self-cleaned, then exclusion from a public contract is likely to be disproportionate. The fact that a company has not apologised for blacklisting may also be considered when examining whether there is sufficient self-cleaning, but this must be considered carefully on a case-by-case basis.

FAQs What type of information can contracting authorities request? The 2006 Regulations allow a contracting authority to request confirmation from an economic operator that there has not been any complaint of blacklisting. In fact, they can request any information they need to decide whether there has been “grave misconduct”. This could include: • • • •

what action has been taken about blacklisting since 2009 whether anyone employed by the company in a management or human resources capacity is named in the TCA files or Ian Kerr’s evidence to the Scottish Affairs Select Committee what measures have been taken by the companies to provide a remedy to blacklisted workers details of any complaints of blacklisting, and how these have been handled

In the event that there has been an adverse finding by a court or tribunal, it would also be reasonable to request details of the judgement and level of damages awarded.

Can contracting authorities terminate contracts with an economic operator that has or is engaged in blacklisting? There is no automatic right to terminate a contract where an economic operator has been or is engaged in blacklisting. A contracting authority’s ability to take action will depend on the precise wording of the contract terms and the materiality of the blacklisting to the contract. In respect of new public contracts, contracting authorities may wish to consider whether to revise their current contract terms and conditions to include a right to terminate the contract where an economic operator engages in blacklisting.

Acknowlegements The following publications have been drawn upon in producing and organisations to supplement its own research to produce this note:- The Data Protection Act 1998 - Trade Union and Labour Relations (Consolidation) Act 1992 (TULRCA) - The Employment Relations Act 1999 (Blacklists) Regulations 2010 - Value Wales Policy Advice Note (PAN) for the Public Sector in Wales http://prp.wales.gov.uk/docs/prp/toolkit/130910blacklistingpanfinal.doc - Department for Business, Innovation and Skills - BIS Guidance on Blacklisting (March 2010)

For further information Chris Benson Partner

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0207 650 1261 [email protected]

Chris Benson is a partner in the employment and discrimination team, and has led the team to their recent victories as employment team of the year at both the Legal Business awards 2013 and The Lawyer Awards 2013. Equally at home in the employment tribunal or the Supreme Court, Chris is described as a “go-to expert” in Chambers and Partners.

Michael Newman Solicitor | 020 7 650 1360 [email protected] Michael Newman is an employment and discrimination law specialist, running cases in employment tribunals, the High Court and Court of Appeal. Described by clients as “exceedingly reassuring”, he has litigated and advised in cases against large, multinational companies, banks and government departments. He is currently vice-chair of the Discrimination Law Association.

Justin Bowden | [email protected] Justin Bowden is a GMB national officer and heads up the GMB’s blacklisting campaign. Married with 2 daughters, he has worked for the Union in various guises since 1993. He also plays cricket and cycles.

The information set out in this document is not legal advice and is not intended to be exhaustive – contracting authorities should seek their own independent advice as appropriate. Please also note that the law is subject to constant change and advice should be sought in individual cases. Appendix A: Model blacklisting motion for a local authority “That [local authority] deplores the illegal practice of ‘blacklisting’ within the construction industry and will ensure that any company known to have been involved in blacklisting practices and not to have indemnified their victims, will not be invited to tender contracts by [the local authority] until they have: (1) identified the steps taken to remedy blacklisting for affected workers; (2) identified the steps taken to ensure blacklisting will not happen again; and, (3) given assurances that they do not employ individuals who were named contacts for the Consulting Association.”

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